Ades Inc has provided the following data for the month of July. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.

Work In Process Finished Goods Cost of Goods Sold Total

Direct Materials .......................... $2,380 $14,520 $62,700 $79,600

Direct Labor ............................... 1,440 13,200 57,000 71,640

Manufacturing Overhead Applied 1,880 8,460 36,660 47,000

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Total $5,700 $36,180 $156,360 $198,240

Manufacturing overhead for the month was underapplied by $5,000. The company allocates any underapplied or overapplied overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

Provide the journal entry that would record the allocation of underapplied or overapplied among work in process, finished goods, and cost of goods sold. How much would net income change after this allocation.